Global income divergence, trade, and industrialization: The geography of growth take-offs

This article formalizes the theoretical interconnections among four post-in dustrial revolution phenomena-the industrialization and growth take-off of rich northern nations, massive global income divergence, and rapid trade ex pansion. In stages-of-growth model, the four phenomena are jointly endogeno us and are triggered by falling trade costs. In the first growth stage (wit h high trade costs) industry is dispersed internationally, and growth is lo w. In the second (medium tr ade costs), the North industrializes rapidly. g rowth take-off, and the South diverges. In the third (low trade costs), hig h growth and global divergence become self-sustaining, In the fourth stage, when the cases of "trading" ideas decreases, the South quickly industriali zes and converges.